Applied Optoelectronics (AOI) announced its second-quarter financial results for the period ended June 30, 2026, on August 6.
Second-Quarter Performance
GAAP revenue was $191.9 million, representing an 86.4% year-over-year increase from $103.0 million in Q2 2025 and a 27.0% sequential increase from $151.1 million in Q1 2026, marking the fifth consecutive quarter of record highs. GAAP gross margin was 27.7%, and non-GAAP gross margin was 29.8%.
GAAP net loss was $22.8 million, or $0.28 per share. Non-GAAP net income was $5.5 million, or $0.06 per diluted share, achieving profitability. In the same period last year, non-GAAP net loss was $8.8 million, or $0.16 per share. In the prior quarter, non-GAAP net loss was $4.9 million, or $0.07 per share.
Management Commentary
Dr. Thompson Lin, Founder, President, and CEO of AOI, stated: "The second quarter was a pivotal turning point for AOI. We delivered record revenue for the fifth consecutive quarter and achieved a significant milestone—non-GAAP profitability this quarter. Furthermore, 800G product shipments saw robust growth, more than doubling sequentially. Strong demand for high-speed optical modules and the large-scale adoption of our 1.8 GHz CATV products generated powerful performance this quarter. We continue to see robust customer engagement for 800G transceivers and 1.6T products, and expect demand to continue exceeding our capacity through mid-2027. We firmly believe the fundamental drivers of long-term demand for our business remain strong, and we are uniquely positioned as a key supplier to the AI, cloud infrastructure, and CATV markets."
Dr. Stefan Murry, CFO and Chief Strategy Officer of AOI, said: "We are pleased that the second-quarter results met or exceeded expectations. During Q2, we continued to make solid progress in ramping production capacity, particularly for 800G and 1.6T products. Our total manufacturing capacity is approaching 200,000 units per month, and we expect to have the capability to produce approximately 650,000 800G and 1.6T units per month by the end of this year. We are working diligently to expand capacity and continue to expect steady quarter-over-quarter revenue growth this year."
Sources of Revenue Growth
The $89.0 million (86.4%) year-over-year increase in Q2 revenue was primarily driven by: a $62.9 million increase in Data Center product revenue, reflecting continued demand for high-speed connectivity products; and a $24.6 million increase in CATV product revenue, mainly due to market share gains and increased volume from continued large-scale deployments by multi-system operator customers.
For the first half of 2026, revenue increased by $140.3 million (69.2%) year-over-year, primarily driven by a $112.2 million increase in Data Center product revenue and a $26.9 million increase in CATV product revenue.
Customer Concentration
In Q2 and the first six months, the top ten customers accounted for 99% and 99% of revenue, respectively (compared to 98% and 97% in the same period last year). The company believes diversifying its customer base is critical to future success and continues to prioritize new customer acquisition and growth in diversified revenue streams.
Business Outlook for Third Quarter 2026
The company expects: revenue in the range of $255 million to $290 million; non-GAAP gross margin between 29% and 30.5%; non-GAAP net income between $10.1 million and $24.0 million; and non-GAAP earnings per share between $0.11 and $0.26 (based on approximately 92.8 million shares).
About AOI
Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical and HFC network products, which are fundamental building blocks for global AI data centers, CATV, and broadband fiber access networks. AOI provides critical infrastructure to tier-1 customers in the cloud computing, CATV broadband, telecommunications, and FTTH markets. The company has R&D facilities in Atlanta, Georgia, and engineering and manufacturing facilities at its headquarters in Sugar Land, Texas, as well as in Taipei, Taiwan, and Ningbo, Zhejiang, China. For more information, please visit www.ao-inc.com.
